MARA Holdings, Inc.

Good day, ladies and gentlemen, and welcome to Marathon Digital Holdings' third quarter earnings webcast and conference call. I would now like to turn the call over to your host, Chris Brendler, Vice President of Investor Relations. Please go ahead.

Thank you, Sherry. Good afternoon, and welcome to Marathon Digital Holdings' third quarter 2003 earnings call. Thank you for joining us for our call today. With me on today's call are Chairman and Chief Executive Officer Fred Thiel and our Chief Financial Officer Salman Khan. Before we get started, I'd like to remind everyone that our prepared remarks may contain forward-looking statements, which are subject to the risks and uncertainties, and we may make additional forward-looking statements during the question-and-answer session. These forward-looking statements are subject to risks and uncertainties, and actual results may differ materially. When using this call, the words anticipate, could, enable, estimate, intend, expect, believe, potential, will, should, project, and similar expressions as it relates to Marathon Digital Holdings are, as such, a forward-looking statement. Please refer to our earnings release for a full recitation of our forward-looking statements. Investors recall all forward-looking statements involve risk, which may cause actual results to differ materially from those anticipated by Marathon at this time. In addition, other risks are more fully described in Marathon's public filings with the U.S. Securities and Exchange Commission, which can be viewed at www.cc.gov and ir.mera.com. Finally, please note that on today's call, we will refer to certain non-GAAP financial measures in which Marathon excludes certain items from GAAP financial results. please refer to our company's periodic reports on Form 10-K and 10-Q and to our website for a full affiliation of non-GAAP performance measures to the most comparable GAAP financial measures. We'll begin today's call with a pair of remarks from Fred and Salman. After their comments, we'll be going through some popular questions from investors before transferring to a live Q&A with our covering analysts. And with that out of the way, I'm going to turn the call over to Fred to kick things off. Fred?

Thank you, Chris. The third quarter was a landmark quarter for Marathon as we achieved several key milestones. To start the quarter, our first international facility in Abu Dhabi powered up just six months after signing contracts, even though this is the first site that was designed and built by Marathon together with our JV partner. In August, we reached our stated goal of 23 exahashes and established Marathon as one of the largest Bitcoin miners globally. Then in September, we proactively restructured our convertible debt to further strengthen our balance sheet and prepare for opportunities that may be created by next year's having. In addition to these key milestones, we also reported strong financial results with record revenue, lower cost per coin mined, and improving margins. Much of this success was the direct result of measurable progress on our 2023 priorities, which are energizing more capacity and optimizing our mining operations. Let me provide some more detail. In the third quarter, we increased our energized hash rate 8% from 17.7 exahashes to 19.1 exahashes. Over the same period, our average operational hash rate for the quarter increased 18%. The faster growth in realized hash rate was due to improved uptime that helped drive record Bitcoin production of 3,490 Bitcoin, up 19% from the prior quarter, as well as lower cost per coin. The increase in uptime was driven by our optimization strategy and a more proactive approach to managing our domestic operations and hosting partners. Over the course of 2023, we have built up our operations team, adding key talent across site operations, power, hardware, software, networks, repair, and cooling. We are now directly managing our hosting partners to improve efficiency and increase uptime. Our approach has included onsite marathon resources to direct operations, upgrade equipment, optimize network design, as well as deploy our proprietary firmware. By way of example, uptime in McKamee, Texas, increased by approximately 20% in the third quarter, even with an approximately 84% increase in curtailment hours relative to the second quarter. This progress is critically important as the improved operating efficiency lowered our direct cost per Bitcoin mined by 9% sequentially, excluding depreciation and amortization, despite a 9% increase in average network difficulty in the third quarter. Our all-in cost per coin, which includes GNA without stock-based comp, dropped 12% quarter-over-quarter and 41% year-over-year. This material improvement is not just the result of optimization. It also reflects the significant scale benefits that we have achieved that help lower our all-in cost per coin. On a year-over-year basis, Bitcoin mined grew 467% in the third quarter as Marathon's block rewards represented 4% of the total available miner rewards in the third quarter. Energization of more efficient mining rigs is also lowering our electricity consumption on a per-hash basis. Our mining fleet is already among the most efficient in the industry, and growing our hash rate with ever more efficient machines will continue to lower our cost per coin. This process is encouraging. Our operational priorities remain unchanged, and we're still focusing on growing our market share in the most efficient and sustainable methods possible while optimizing our operations to continually drive lower costs. In a few minutes, I'll provide an update on our growth plans and how we're innovating to drive lower costs. But first, I'm going to turn the call over to Salman to discuss our financial results for the third quarter.